Possible method of 0% interest mortgage!

Hassan424

SG27 wrote: »

You would have to pay a balance transfer fee of around 3% each time you transfer.

Also I'm not sure how you could get the money off the card and into your offset account without it being treated as an expensive cash advance.

Yeah I was looking at that - but let says on the 100k I wanted to borrow - after 2 years I would have only paid off 6k of the mortgage.

But under this method it would be nearly 12k - so at a 4% transfer fee im still looking at having paid an extra 3k off.

Hassan424

ACG wrote: »

As soon as you try putting the money into a bank account its no longer classed as a Balance Transfer, its classed as a money transfer which usually isnt interest free.

Hi, yeah I found a couple of cards that allow 0% money transfer with a 24 month 0% period

Hassan424

WellKnownSid wrote: »

Why not 'especially' to the banks?

If you're that worried about it, can't you just source the £100k you need to buy a house from somewhere / someone else on an interest-free basis?

How about crowdsourcing it? Find, I don't know - perhaps 5,000 people down the pub and ask them all to lend you £20. Then when you need to pay them back, find another 5,000 people to lend you another £20 and use that money to pay the original 5,000 people back.

It could work...

Hi,

That's what I initially tried to do - I have friends with mucho money in their account - but they too cheap to lend it

The main reason I don't do it that way, is that the money then becomes tied up into the house - so if someone wanted that money back earlier than expected, it can cause problems - this way the cash is still liquid and available in your bank account.

And as far as the 5000 people idea goes - I honestly would do it if I knew that many people! Lol!

_Andy_

So, what would happen once the 0% ran out and you go to c15%?
What would happen if you couldn't find another lender to BT to?

(rhetorical anyway given your plan isn't feasible)

vuvuzela

Jonbvn wrote: »

Depsite what some of the doubters has posted above, this has been done before and posted on the MSE MFW board.

http://forums.moneysavingexpert.com/showpost.php?p=5638997&postcount=3

Unfortunately the usual balance transfer fees now make it impractical.

However 6 years ago, the banking industry was a completely different animal.

Hassan424

_Andy_ wrote: »

So, what would happen once the 0% ran out and you go to c15%?
What would happen if you couldn't find another lender to BT to?

(rhetorical anyway given your plan isn't feasible)

Well, since the money is in your own account - you just pay it off and don't get charged - in an offset mortgage the money in the account still remains your money and you can withdraw it at any time.

Also remember that after the two year period you dont need as much money to offest your mortgage - so you can reduce the credit debt.

The only reason I see it not being as efficient is due to the balance transfer fees: approx 4%, which would mean that under my proposal:
£500 repayment + £1000 overpayment = 36K over 2 years
So after 2 years I would owe 64k - but as I had to pay 4k transfer fee that saving is actually only 32K

Traditional overpayment:
£500 repayment + £1000 overpayment = 36K over 2 years.
But as you need to account for interest - I would still owe 70k

Thus the difference is an extra 2k saving over 2 years. Over the life of the mortgage (approx 5.5 years - you will pay approx 7K in fees), but with out offsetting you will pay 13K in interest - so you save approx 6k.


Of course overpaying 1k a month is extreme, but as you decrease the amount you overpay, the savings increase:e.g. 500 a month overpayment - it shaves approx 20k and 2 years off your mortgage using the offset method as opposed to just overpayments alone. (8yrs paying back 100k, vs 10ys paying back 121K, the money transfer fee during this time would be approx 10k - so overall you save 10k)

So as far as I can see the the question is whether you can get a low enough transfer fee or long enough duration or both?


Now I am well aware that sometimes ideas can cause a person to lose sight of sense - hence why I posted this, to get people's thoughts on the system, as such could you please elaborate on why it would not be feasable?

I am more than happy for people to say it won't work - but please explain your rationale

_Andy_

OK so you're looking for £100k in credit card limits.

What is your gross annual salary?

Hassan424

_Andy_ wrote: »

OK so you're looking for £100k in credit card limits.

What is your gross annual salary?

Basically yeah, - I have to say I am in a fortunate position, as while my gross salary is only 30k at the moment, I actually switched my job a few years ago to gain experience in another sector, thus taking a pay cut.

My plan is to switch back to my previous sector - whereby it will be approximately 40k gross, and then do freelance work on top to about 15K, so total about 55k gross (hopefully)!

I have no loans (except student loan - my bank said that doesn't count), my credit cards are all paid off.

As I said, this is just an idea I've had, I've put it out here so people can point out the flaws and also workarounds if there are any.

R_P_W

Hassan424 wrote: »

Basically yeah, - I have to say I am in a fortunate position, as while my gross salary is only 30k at the moment, I actually switched my job a few years ago to gain experience in another sector, thus taking a pay cut.

My plan is to switch back to my previous sector - whereby it will be approximately 40k gross, and then do freelance work on top to about 15K, so total about 55k gross (hopefully)!

I have no loans (except student loan - my bank said that doesn't count), my credit cards are all paid off.

As I said, this is just an idea I've had, I've put it out here so people can point out the flaws and also workarounds if there are any.

You are not going to get 100k credit card limits on a 55k salary!